The Financial Conduct Authority is stripping back its insurance rulebook to create simpler, more straightforward rules for the industry.
The regulator plans to strip outdated or duplicated requirements, which it believes could support lower costs and wider access for the businesses and consumers who rely on insurance to manage risk, while maintaining appropriate levels of protection.
It is proposing to create a new definition to identify large, commercial insurance customers who should not be captured by its conduct rules. This would ease the burden on firms insuring larger businesses that can manage risks independently, while protecting smaller commercial customers.
Matt Brewis, director of insurance at the FCA, said: “We are stripping back our insurance rulebook by removing ineffective, outdated or duplicated regulation, as part of our drive to become a smarter regulator and support growth.
“We have listened to industry and we are taking action. In doing so we will reduce regulatory costs and increase the competitiveness of the already world-leading UK insurance sector, while maintaining vital protections for smaller customers.”
The FCA is also proposing further measures that could benefit the insurance market more widely. These include no longer requiring firms to review the value of their product at least every 12 months. Instead, firms would use the risks and characteristics of each product to decide how often they review them.
Firms would be given flexibility to appoint one lead insurer to comply with its rules in instances where more than one party is involved in designing the insurance product.
In addition, the FCA plans to broaden the scope of bespoke contract exclusions and make them easier for all insurers and brokers to use. Bespoke contracts are built to suit one customer upon that customer’s request, which means they automatically have the protections product governance rules provide.
Finally, the FCA is proposing to get rid of duplicative annual reporting and employer’s liability notification requirements and remove the specified minimum hours of training and development required for insurance and funeral plan employees.
